Exam 11: Organizational Structure and Controls

The multidivisional structure was initially designed to produce three major benefits over the functional form. Which of the following is NOT one of the three benefits?

Airlines have forged a number of complementary strategic alliances,in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to

A firm pursuing an unrelated diversification strategy will utilize a______structure.

In the competitive form of the multidivisional structure,the focus of headquarters is on all of the following EXCEPT

Firms implementing the multidomestic strategy often attempt to isolate themselves from global competitive forces by establishing protected market positions or by competing in industry segments that are most affected by differences among local countries.

Megaline,Inc.,with five divisions,follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office must decide where to allocate capital in the next year. Which scenario is the MOST likely?

Companies and business units using the differentiation strategy should emphasize financial rather than strategic controls.

In an SBU structure,financial controls.

The worldwide geographic area structure differs from the worldwide product divisional structure in the level of centralization of decision making.

Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to communicate easily with companies with which Toyota has contracts for services. This results in the suppliers and Toyota (the strategic center firm)being more

Specialization refers to the extent to which authority for decision making is retained at higher managerial levels.

The need for the organization to combine local responsiveness and efficiency is most critical in a______strategy.

Internal competition for corporate resources is effective for companies with an unrelated diversification strategy,but dysfunctional for companies with a related constrained strategy.

Case Scenario 2: Palmetto. Palmetto was an early pioneer of personal data assistants (PDAs)and dominates that market space (in terms of market share)with its core product, the Palmetto Pidgy. Because this product category was entirely new to the market, Palmetto had to internally develop the hardware and software sides of the business, and today it is both a manufacturer of PDAs and a programmer and licensor of its PDA operating system software. Recently, however, the hand-held device maker's performance has taken a dive as a result of slumping sales and costly inventory problems. Palmetto has also had difficulty coordinating its software and hardware businesses, in part because of the near absence of a coherent structure and the differing economics underlying the two. Specifically, hardware for PDAs is increasingly a cost-based business, while software is a highly differentiated one. While Palmetto is doing pretty well in both businesses, its own resource base does not allow it to compete any differently than that proscribed for other industry participants (that is, it competes on cost with hardware and features with software). In addition to the issues created by these fundamental differences, other large companies are entering both the equipment (such as Sony)and software (such as Microsoft)sides of its business, putting further pressure on margins. Management has decided that it is unable to focus on the complexities of each of these businesses so it is opting to break Palmetto into two separate, independent public companies - Pal, Inc. will be devoted to hardware and Mettolink, Inc. will be devoted to software. -(Refer to Case Scenario 2). What basic structural form would you recommend for both Pal and Mettolink? What must each firm be careful to avoid with this structure?

Discuss the organizational structures used to implement corporate-level strategies.

With a related diversification corporate-level strategy,financial controls are used by corporate leaders to verify the sharing of appropriate strategic factors such as knowledge,markets,and technologies across businesses.

The fewest integrative devices are used in the______structure.

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory?

In the______multidivisional structure there is complete independence among the firm's divisions.

A multidomestic strategy would be associated with